I've a number of conceptual NPCs that may reoccur with each region released, either present in a dungeon or town dependent on quest offered, but I wanted to gauge interest regarding such an idea. Still writing these characters, but if you're familiar, think Dark Souls esque NPCs, who appear every few regions or dungeons depending on player interactions and decisions.

So, what do you all think of such a divergent concept from base Morrowind's quest design?

It would really depend on the implementation and the character design. It sounds like a cool idea, but I would first need to see how it interfaces with other design, what kind of characters you actually have in mind, and how you want to account for player freedom (the fact that the player can approach settlements and dungeons in any order). I'm also worried that implementation of these would be forgotten in the period between area releases.